Seizing the Opportunity of CIIE

CIIE will be a great networking and marketing opportunity for small and medium-sized companies in India to become global exporters and players in the world market.

by
Chaitanya Mallapur

December 4, 2018

In recent years, Chinese enterprises have provided the solution of “Made in China” for the economic construction of countries alongside the Belt and Road. The picture shows the large equipment production workshop of Northern Heavy Industries Group Co., Ltd. in Shenyang, Liaoning Province. [Xinhua]

Seizing the Opportunity of CIIE

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The China International Import Expo was organized in Shanghai in November 2018. The idea behind it is to help China evolve from a manufacturing powerhouse to a consumption-driven economy. India should seize the opportunity because it will help Indian exporters understand local markets in China and the demand and supply of goods and services there.

As a platform for global buyers and sellers, the expo will help boost cooperation between Indian and Chinese companies in the years to come and encourage foreign investment that meets the terms of various trade policies and agreements. It will provide Indian manufacturers and exporters a forum to display their products and services for the Chinese market.

Indian traders must closely follow this expo because it will help address the rising trade defcit by affording greater access to Chinese markets.

SEIZE CIIE’S OPPORTUNITY

China’s economy has grown multi-fold since its reform and opening-up began in 1978. After overtaking Japan in 2011, China became the second-largest economy in the world. Today, it is a manufacturing powerhouse and largest exporter of goods in the world. India, an emerging economy and a strong competitor of China, is following suit.

However, a growing concern for India is its rising trade deficit with China, which has increased by 74 percent from US$36 billion in 2013-2014 to US$63 billion in 2017-2018. The imbalance is caused by increasing imports from China compared to exports, which has been attributed to shortages or non-availability of items in the domestic market and cost competitiveness of foreign manufacturers. China is India’s largest trading partner, with bilateral trade valued about US$90 billion in 2017- 2018, up 36 percent from US$66 billion in 2013-2014.

India chose to not attend the Belt and Road Initiative (BRI) forum hosted by China in 2017, which was attended by leaders of 29 countries and a delegation of over 100 nations. The project aims to connect Asia, Europe and Africa through rail, road and sea links to facilitate trade across regions, with China planning to invest US$800 billion over the next five years. Joining the BRI would be the perfect opportunity for India to start recovering its trade deficit with China. With little progress made on that front so far, India must make sure it does not waste the potential that CIIE now presents.

India’s major imports from China are electrical machinery, mechanical appliances, telecom instruments, computer hardware and peripherals, organic chemicals, fertilizers, consumer electronics, plastic and articles and iron and steel. Major exports include organic chemicals, mineral fuels, copper and articles, cotton and oils, salt, plastering materials and animal and vegetable oils and fats. India needs to dive deep into Chinese markets to cater to their local needs.

To boost its exports, India is now seeking trade deals with China, offering tariff waivers on products such as castor oil, menthol, granite and diamonds under the Asia Pacific Trade Agreement.

THE WAY FORWARD

India needs to attract more Chinese investment into Indian markets. The share of China’s FDI equity inﬂows to India’s overall FDI inﬂows accounted for just 0.53 percent from April 2000 to June 2018. The cumulative FDI equity inﬂows from China to India stood at US$2 billion over the same period.

Sectors receiving the most investment from China include the automobile industry, metallurgical industries, services, electrical equipment and industrial machinery. The manufacturing sector in China is expecting big change in the coming years due to rising labour costs. This has made manufacturing companies in China look to countries like Bangladesh, Laos and African nations.

China, a country with a population of over 1.4 billion will provide a diverse market for Indian products like pharmaceuticals, information technology services and agricultural products such as fruits, vegetables and meat. The expo will also help exporters understand China’s domestic needs and household consumer demands better through its future editions.

Stalls at the expo will help Indian manufacturers understand the diverse range of consumers as they create brand awareness. This will be a great networking and marketing opportunity for small and medium-sized companies in India to become exporters and global market players.

India needs to seize this opportunity, which will help transform it into a global manufacturing hub and integrate more deeply into global supply chains. The expo will address India’s growing consumer demands, generate jobs, ensure competitiveness and most importantly, bridge the trade deficit gap by reducing imports and boosting exports.

India needs to effectively transform its vision promoted by ‘Make in India’ into a ‘Made in India’ brand. To this end, policies will need to focus on qualityled manufacturing, competitiveness, innovation and technology-driven equipment.